Notice of Claim and Operating Without a Renewed License

Q. I received a letter from a lawyer saying that he represents a person who was injured in an accident after drinking at my restaurant. The letter says that my corporation is responsible for this person’s injuries and that I should notify my insurance carrier of the claim. I do not have liquor liability insurance, but I do have general liability coverage. Should I turn the letter over to my general liability insurance company?

A. Yes, you should immediately send the letter to your general liability insurance carrier or company and your insurance agent. The letter you received is what is called a “Notice of Claim”. The letter is advising you that a person has a claim against you for damages sustained as a result your negligence in serving alcoholic beverages. Failure to promptly advise your insurance carrier that you received a Notice of Claim, or lawsuit papers, or any notice that a claim is being made against you, could result in a denial of coverage by the insurance company, basically leaving you without insurance coverage. Check your insurance policy carefully. It will state that you are required to notify the insurance carrier (or your insurance agent) of any notice received by you that a claim for damages is being made. The letter you received seems to indicate that the person has a potential ADram Shop@ or a liquor liability action against you (an action for damages caused by the service of alcoholic beverages to a patron).

Even though you do not have liquor liability coverage, you should still notify your general negligence insurance carrier of the existence of the claim. It is often the case such actions will include general negligence claims as well as liquor liability claims. An attorney should also be retained immediately to defend you against the liquor liability claims.

Act quickly to preserve whatever insurance coverage you may have. Notify your carrier and your insurance agent in writing via certified mail or overnight mail and attach a copy of the Notice of Claim letter. You should also contact an attorney to discuss what further steps you must take to defend the claim, as identifying and interviewing witnesses. Remember, the more time that passes, the harder it will be to locate witnesses and other information that could help you in your defense.

OPERATING WITHOUT RENEWED LICENSE

Q. What can happen if a licensee continues to sell alcoholic beverages after its liquor license expires and before the license is actually renewed by the Pennsylvania Liquor Control Board? I was caught selling when my license was not renewed. The license was renewed two days later.

A. The owner of the establishment is in essence operating a Aspeakeasy” by selling alcoholic beverages without having the PLCB liquor license renewed. The Office of Administrative Law Judge has held that there is no legal distinction between the so?called Aspeakeasy,” which is operated by a completely unlicensed individual, and where a licensee sells alcoholic beverages during a period of time when the license had expired and the license has not yet been renewed. In addition to citations being issued against the liquor license by the Pennsylvania State Police, Bureau of Liquor Control Enforcement, the individual licensee can be charged criminally for illegal sales as well as being subjected to the property forfeiture provisions of the Pennsylvania Liquor Code.

As seen in the Observer Magazine, a monthly beverage journal magazine. Edward Taraskus contributes the Know the Law column.